How Do You Calculate Stamp Duty & Registration Charges – Explained!
The real estate market in India has become very expensive over the past couple of years, which is the reason why so many people find it difficult to buy property. One effective solution in this case is to apply for home loan that provides the required funds for purchasing a property. Now, many make the mistake of thinking that the only cost that they incur while buying a house is while paying off the home loan’s interest rate. However, this is not true; there are other charges involved in buying a house that increases the cost of the property purchase, such as the stamp duty and registration charges. If you are not familiar with these charges, read on to learn more about them.
- Stamp duty
Whenever there is a transaction of property between a buyer and seller, the government will levy a tax on that transaction. This tax is termed as stamp duty. Stamp duty is charged on both commercial as well as residential properties, and on leasehold properties. Since this tax is levied by states, the rate can differ as per the state in which the property is being bought. Stamp duty is necessary to prove legal validity, which only takes place once the property documents have been marked with approval of the authorities. The stamp duty rates in most of the major Indian states are above 5% of the property value, which makes stamp duty in India higher than most developed, developing, and even under-developed countries in the world.
- Registration charge
The registration charge is a fee that is supposed to be paid to place a deed or contract in the government’s records. The government charges this fee in order to maintain a registry of documents. Paying the registration charge helps the buyer make the property papers legally binding in nature.
How to calculate stamp duty and registration charges?
Stamp duty can cost in the range of 5-7% of a property’s market value. When it comes to registration charges, it is usually 1% of the property’s market value. Do keep in mind that these expenses could amount to lakhs of rupees. Since the required funds to pay for stamp duty as well as registration charges are not usually covered under a home loan, make sure to have enough funds to cover these charges. It is also important to note that there are several factors that determine the stamp duty charges. These include the buyer’s age and gender, the type of property they are buying, its market value, location, as well as intended usage. It is advisable to make use of a stamp duty calculator to accurately evaluate the amount of stamp duty you will have to pay while buying a property.
Now, you can pay stamp duty online as well as offline. It is possible to purchase physical stamp papers from an authorised seller on which the details of the property agreement will be mentioned. Another method is to go to an authorised franking agent who will stamp the property documents, which will indicate that the stamp duty has been paid. If you prefer to pay the stamp duty online, you can do so by visiting the SHCIL website (Stock Holding Corporation of India). You will receive an e-stamp certificate after completing the payment.
